Airbus A380: The $25 Billion Gamble
Updated: Feb 6
In this article, I explore the downfall of one of the most promising aircrafts, the Airbus A380.
When the Airbus A380 entered service on the 25th of October 2007, it was considered to be the next revolutionary airplane and nicknamed the ‘hotel in the sky’. The largest commercial aircraft in the world, the A380 has a wingspan of nearly the length of a football field and can fit over 600 people. It is stunning to look at and is an engineering marvel. However, last year Airbus officially stopped production of the A380 after it completed its final and 251st delivery to Emirates last winter. The company decided that their $25 billion investment could not be recouped. Why did an airplane meant to leave an ever lasting mark on the industry stop production after just 14 years? The answer comes down to 4 main reasons.
1. Logistical Nightmare
The A380’s wingspan is 15 meters more than the Boeing 747, the next largest airliner, and supporting this airplane is a tremendous challenge for airports. Consequently, airports that support the A380 have to undergo countless changes to accommodate this aircraft. Some of these include:
Longer and wider runways: The Boeing 747 requires a length of 2700 meters whereas the Airbus A380 needs 3000 meters.
More gate space
Dual boarding aerobridges for the upper deck.
JFK airport in New York estimates to have spent over $175 million on infrastructure upgrades for the A380 alone. These enhanced requirements severely limit the airports that can handle the aircraft. In the USA and Canada, there are only 16 airports that can service the plane whereas there are 32 that can service the Boeing 747.
2. Changing Airline Market
Over two decades ago, Airbus projected that the need for larger than 400 seat aircrafts would dramatically increase in the coming years and there would be 1250 such airplanes in circulation by 2025. Airbus predicted that there would be around 15-20 major international hubs across the world and airlines would use the hub and spoke model of transportation. This essentially means that short and medium haul flights would be serviced by smaller flights like the Airbus A320 or the Boeing 787 Dreamliner and that passengers would converge at a central hub. From there, larger planes like the A380 or the Boeing 747 would manage long haul and high volume routes between these primary markets. For example, to get from Chennai to London, the hub and spoke model requires passengers to go through major cities such as Delhi, Mumbai or Dubai. However, with the advent of more advanced and fuel efficient aircrafts like the Boeing 777-300 or the Airbus A350, airlines now prefer a point to point model of transporting passengers. In this case, smaller planes operate between all destinations without the need to converge at a hub. To travel from Chennai to London in the point to point model, a smaller aircraft will fly directly from Chennai to London. The rise in these additional destinations has led to the dilution of power of the mega hubs. One reason for this is the increase in open skies agreements allowing carriers to cater to even the smaller cities of a country. For example, in China where planes once used to fly only to Beijing, they have now opened routes to Shanghai and Guangzhou.
3. Poor Efficiency
The airline industry is not consistent year round and the peaks coincide with the various holiday seasons. For almost all airlines, the northern hemisphere summer makes up 90% of its overall business and they bank on the fact that they should be profitable enough in the summer to at least break even the rest of the year. During the peak, all major A380 routes can be filled to maximum capacity like London-Los Angeles, Munich-New York, Singapore-Sydney. But in the winter, there are only 5 to 10 hubs large enough to fill up at A380. The others simply don’t stand a chance. According to Qantas, a 14 hour A380 flight from Sydney to Los Angeles cost $305,735 to take 484 passengers. This brings the per hour cost to about $21,000. On the other hand, the Boeing 777 cost $192,422 to fly 361 passengers on the same route. For the 777, the cost per hour was just $13,601. While the A380 carries 34% more passengers, it costs 60% more. It is obvious that not all passengers are equal and some pay extravagant amounts for first and business class services. The A380 caters perfectly to their needs with a floor area of over 500 square meters. Some airlines like Emirates have a lounge, bar, spa and even a shower onboard. However, the bulk of the traffic is economy and when these seats are not filled, it becomes a real challenge to justify the $465 million dollar price tag of the plane.
4. Failure of the freighter version
To recoup the $25 billion investment, the A380 freighter problem was vital and it was met with great excitement at first. For over half a century, Boeing has monopolised the freighter market with the 747 and 777. Currently Boeing has received over 760 orders for freighter variants, with 732 already delivered. On the other hand, Airbus has recorded only 38 throughout the course of its history and has delivered all. From these statistic, it is evident that this part of the aviation industry is Boeing dominated and it would be very difficult for Airbus to slip through. However, the sheer size of the A380 was a sign of revolution to cargo planes and gave the hope for increased capacity load. Airbus received 27 orders for this variant but the program had to be scrapped. This happened for 2 reasons
Due to the delayed production line, Airbus decided to focus more on the passenger planes and temporarily halted the freighter program
Loading cargo brought up various technical issues. While there was unlimited space on the plane, dense cargo would reach maximum capacity with a large chunk of the airplane remaining empty. This means that a lot of the 500 square meter carpet area would travel without any load. Also, the upper deck proved to be too weak to carry any considerable weight.
Airbus made a monumental decisions over two decades regarding the future of aviation and it is safe to say that they failed with the A380. Out of their predicted 700 orders, only 313 were filed, out of which only 251 were delivered (62 were cancelled). With more efficient and cheaper aircrafts coming into the market, the A380 is being phased out but although production stopped last year, airlines will continue running it well into the late 2020’s. The experience of spotting and flying in an A380 is simply surreal and aviation enthusiasts still have plenty of time to fulfil that dream.